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Case Studies
Scenario 1 - NO ESTATE PLANNING- John Money Bags is an investment advisory firm executive residing in Manhattan, New York and is a United States taxpayer. JohnÕs net worth is $50 million (U.S. Dollars). John is 60 years old and married with two children. John has a $5 million dollar life insurance policy payable to his wife as beneficiary. John dies and leaves his family an estate worth $55 million (U.S. Dollars). JohnÕs heirs will have an estate tax bill in the amount of $27,500,000. This estate tax will be payable to the United States Treasury nine months after his passing. His heirs will net $27,500,000.
Scenario 2 - ADVANCED ESTATE PLANNING SOLUTION- by Jeffrey N. Zisselman, JD
John Money Bags is an investment advisory firm executive residing in Manhattan, New York and is a United States taxpayer. JohnÕs net worth is $50 million (U.S. Dollars). John is 60 years old and married with two children. John has a $5 million dollar life insurance policy payable to his wife as beneficiary.
I recommend establishing an irrevocable life insurance trust to be named as beneficiary of JohnÕs $5 million dollar life insurance policy. This vehicle will permit the insurance proceeds to pass into the ILIT avoiding any estate tax.
I recommend establishing a family limited liability company to hold JohnÕs $30 million real estate portfolio. By transferring the portfolio and applying a 35% discount ($10,500,000) we can lower his taxable estate to $19,500,000. John has $20 million of miscellaneous assets.
Therefore, when John dies he leaves his family an estate worth $39,500,000 million (U.S. Dollars). JohnÕs heirs will have an estate tax bill in the amount of $19,750,000. This estate tax will be payable to the United States Treasury nine months after his passing. His heirs will net $34,750,000.